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Press Release

Only a quarter of Pension Trustee Boards currently independently review governance, ahead of looming legal requirement

June 8, 2021

Pension Board and Trustee Consulting|Pensions Corporate Consulting

LONDON, June 8, 2021 – A report by Willis Towers Watson finds that the pensions industry has some way to go in order to meet the Pensions Regulator’s (TPR’s) proposed new list of governance expectations.

The new Combined Code, currently undergoing consultation, is expected to require all schemes with 100 or more members to carry out an assessment of their risk, governance and effectiveness practices at least annually. It will also require schemes to appoint an independent reviewer of their governance and risk management practices.

But Willis Towers Watson’s recent Trustee Governance Survey* reveals that only half of trustee boards currently review their effectiveness annually, and just over a quarter (29%) use some form of external validation.

Jenny Gibbons, pensions governance lead at Willis Towers Watson, said: “Reviewing the effectiveness of your trustee board and wider governance is a journey that’s well worth travelling. We know that better governance leads to better outcomes – for schemes, sponsors and members – and it is better to start this process now, rather than wait for the Combined Code to make it mandatory.”

We know that better governance leads to better outcomes – for schemes, sponsors and members – and it is better to start this process now, rather than wait for the Combined Code to make it mandatory.”

Jenny Gibbons | Pensions Governance Lead

It’s positive to see that, according to the latest industry-wide survey, most trustees feel their board performed well against the governance and logistical challenges over the last year – with around 80% reporting good engagement in meetings and appropriate contingency plans. Over 90% were comfortable with the responsiveness of the trustee board to urgent issues over this challenging period; a real-life test of continuity planning.

Furthermore, technology is beginning to come of age for pension scheme trustee boards – 85% of respondents felt well supported by technology during and in-between meetings throughout the pandemic. There is also evidence that the use of technology is beginning to shift from ‘monitoring and tracking’ (54%) to automated triggers that aid decision making (56%); a forward-looking approach.

“Capturing this technology momentum in the way schemes are run in a post-lockdown world will be key to agile and effective decision-making which, after all, is at the heart of what good governance is striving for,” said Gibbons.

Independent Professional Trustees

The survey reveals that, for many schemes, Independent Professional Trustees (IPTs) have also had an important impact in improving governance and effective decision making. Particularly when 73% believe the role of trustee has significantly more risk attached to it now, and 65% say their role as trustee has become more difficult.

The survey goes further, validating the value IPTs bring to their schemes, with 88%** of those schemes that have an Independent Professional Trustee asserting that all schemes should have one.

Gibbons said: “It is clear that the presence of an IPT reduces other trustees’ concerns about the complexity and risk of running DB and DC schemes due to their expertise and knowledge of other schemes and market practices.”

The trend is likely to continue with nearly three-quarters of corporate sponsors predicting that the number of IPTs will continue to grow, while a third think they will see many trustee boards eventually being replaced by a sole trustee. The report shows that one-in-10 schemes have reviewed the sole trustee model of governance within the last 12 months. 

Bringing IPTs onto boards may also solve a more immediate problem, as two-thirds of schemes report that it is becoming harder to find members to act as trustees.


The report finds that seven-in-10 trustees are aware that a lack of diversity is one of the key challenges facing the industry. And while over half (54%) feel that their own trustee board is sufficiently diverse in terms of life experience, only a quarter (28%) can say the same for diversity by age, gender and ethnicity.

Diversity is clearly thought to be an issue, but only a minority (21%) are actively targeting it as a key priority which should be addressed over the next three years.

“Measures being taken by some schemes to increase the diversity on their trustee boards include: actively encouraging applications from underrepresented groups; subconscious bias training for existing board members; promoting trustee roles as career development opportunities; and changing meeting practices to attract a more diverse group of trustees,” said Gibbons. “However, it must be said that currently only a minority of schemes are engaging and taking practical actions.”

The future of governance

Looking to the future, the report finds that the biggest change to scheme governance is expected by participants to be an increased focus on Environmental, Social and Governance (ESG) factors (44%) and assessing the impact of climate change on pension schemes (39%).

“Trustees hoping for a breather after the challenges of 2020 and early 2021, and even those whose DB funding levels have seen sustained improvements, will in fact continue to have to work apace with new roles, structures and improvements to assimilate under the new Combined Code,” said Gibbons. “The trick for trustees and sponsors will be to make those improvements work for them; to bring about the best outcomes for their scheme’s specific structures and requirements.”

Notes to editors

*Willis Towers Watson’s Trustee Governance Survey 2021 surveyed 172 trustees and pension managers of Defined Benefit pension schemes at the end of 2020 and beginning of 2021.

**Excluding the views of IPTs themselves

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving in more than 140 countries and markets. We design and deliver solutions that manage risk, optimise benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.

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